Note 13—Retirement Plans

Defined Benefit Plans

The Company maintains defined benefit retirement plans for certain domestic employees. Benefits are based primarily on years of service and earnings of the employee. The Company recognizes the funded status of its defined benefit plans in the Consolidated Balance Sheets. The funded status is the difference between the retirement plans' projected benefit obligation and the fair value of the retirement plans' assets as of the measurement date.

Included in Accumulated other comprehensive income (loss), net of tax at December 31, 2015, are the following amounts that have not yet been recognized in net periodic pension costs: unrecognized actuarial losses of $42.2 million ($26.4 million, net of tax) and unrecognized prior service cost of $1.1 million ($0.7 million, net of tax). The prior service cost and actuarial loss included in Accumulated other comprehensive income and expected to be recognized in net periodic pension cost during the year ended December 31, 2016, are $0.2 million cost ($0.1 million cost, net of tax) and $2.1 million ($1.3 million, net of tax), respectively.

The reconciliation of the beginning and ending balances of the projected pension benefit obligation, the fair value of the plan assets and the ending accumulated benefit obligation are as follows:

(in millions)	2015			2014
Funded status
Projected benefit obligation
Beginning of year	$	192.3		$	179.7
Change in benefit obligation:
Service cost		3.7			4.0
Interest cost		7.1			7.7
Plan amendments		—			0.6
Actuarial (gain)/loss		(16.7	)		19.1
Benefits paid		(12.1	)		(18.8	)

End of year		174.3			192.3

Fair value of plan assets
Beginning of year		177.3			173.5
Change in plan assets:
Actual return on plan assets		(3.5	)		21.6
Company contributions		1.0			1.0
Benefits paid		(12.1	)		(18.8	)

End of year		162.7			177.3

(Unfunded) funded status end of year	$	(11.6	)	$	(15.0	)


Accumulated benefit obligation at end of year	$	173.5		$	191.2

The accumulated benefit obligation differs from the projected pension benefit obligation in that it includes no assumption about future compensation levels. The Company's projected benefit obligation at December 31, 2015 includes approximately $21.3 million related to the Company's executive supplemental and director defined benefit pension plans. The executive supplemental and director defined benefit plans have no plan assets and the Company is not required to fund the obligations. The U.S. plans required to be funded by the Company were fully funded at December 31, 2015.

The fair value of the plans' assets at December 31, 2015 and 2014 by asset category are as follows:

Fair Value Measurements at December 31, 2015

Asset Category (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Observable Inputs (Level 3)		Total
Cash	$	0.6	$	—	$	—	$	0.6
Mutual funds:
Equity mutual funds(1)	$	19.8	$	—	$	—	$	19.8
Fixed income mutual funds(2)		142.3		—		—		142.3

Total	$	162.7	$	—	$	—	$	162.7

Fair Value Measurements at December 31, 2014

Asset Category (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Observable Inputs (Level 3)		Total
Cash	$	0.6	$	—	$	—	$	0.6
Mutual funds:
Equity mutual funds(1)	$	21.4	$	—	$	—	$	21.4
Fixed income mutual funds(2)		155.3		—		—		155.3

Total	$	177.3	$	—	$	—	$	177.3


(1)	This category is comprised of investments in mutual funds that invest in equity securities such as large publicly traded companies listed in the S&P 500 Index; small to medium sized companies with market capitalization in the range of the Russell 2500 Index; and foreign issuers in emerging markets.
(2)	This category is comprised of investments in mutual funds that invest in U.S. corporate and government fixed income securities, including asset-backed securities; high yield fixed income securities primarily rated BB, B, CCC, CC, C and D; and US dollar denominated debt securities of government, government related and corporate issuers in emerging market countries.

The Company employs a liability driven investment approach whereby plan assets are invested primarily in fixed income investments to match the changes in the projected benefit obligation of funded plans that occur as a result of changes in the discount rate. Risk tolerance is established through careful consideration of projected benefit obligations, plan funded status, and the Company's other obligations and strategic investments. The established target allocation is 88% fixed income securities and 12% equity securities. Fixed income investments are diversified across core fixed income, long duration, and high yield bonds. Equity investments are diversified across large capitalization U.S. and international stocks. Investment risk is measured and monitored on an ongoing basis through investment portfolio reviews, annual projected benefit liability measurements and asset/liability studies.

The net asset (liability) consists of the following amounts recorded on the Company's balance sheet at December 31, 2015 and 2014:

(in millions)	2015			2014
Noncurrent assets	$	9.7		$	7.7
Current liabilities		(1.0	)		(1.0	)
Noncurrent liabilities		(20.3	)		(21.7	)

Asset (liability) at end of year	$	(11.6	)	$	(15.0	)

The Company made contributions of $1.0 million to the pension plans during 2015, of which $1.0 million was contributed to the Company's executive supplemental and director defined benefit pension plans to pay current participant benefits as these plans have no plan assets. No minimum contributions to the pension plans were required in 2015. During 2016, the Company expects to pay approximately $1.0 million in participant benefits under the executive supplemental and director plans. In light of the plans' funded status, the Company does not expect to make discretionary contributions to its other pension plans in 2016.

Components of net periodic benefit cost for the years ended December 31 are as follows:

(in millions)	2015			2014			2013
Service cost	$	3.7		$	4.0		$	5.1
Interest cost		7.1			7.7			8.1
Expected return on plan assets		(10.2	)		(10.8	)		(12.2	)
Settlement cost		—			—			8.9
Amortization of unrecognized net loss		4.1			3.3			6.5
Amortization of unrecognized prior service credit		0.2			0.3			0.3

Net periodic benefit cost	$	4.9		$	4.5		$	16.7

Settlement and curtailment costs totaling $8.1 million relate to the sale of the Transportation Products business on December 31, 2013 and are included in income from discontinued operations for the year ended 2013. This total consists of $7.3 million in settlement costs, including recognition of $6.1 million of previously unrecognized actuarial losses, and a $0.8 million curtailment charge, inclusive of prior service cost. See Note 4 for further information related to the sale of the Transportation Products business.

Weighted-average assumptions for benefit obligations at December 31 are as follows:

	2015			2014
Discount rate		4.15	%		3.84	%
Rate of compensation increase		4.29	%		4.29	%
Expected long-term return on plan assets		6.20	%		6.30	%

Weighted-average assumptions for net periodic benefit cost for the years ended December 31 were as follows:

	2015			2014			2013
Discount rate		3.87	%		4.58	%		3.77	%
Rate of compensation increase		4.29	%		4.29	%		4.29	%
Expected long-term return on plan assets		6.30	%		6.48	%		6.50	%

Beginning in 2016, the Company will move from utilizing a weighted-average discount rate, which was derived from the yield curve used to measure the benefit obligation at the beginning of the period, to a spot yield rate curve to estimate the pension benefit obligation and net periodic benefit costs. The change in estimate provides a more accurate measurement of service and interest costs by applying the spot rate that could be used to settle each projected cash flow individually. This change in estimate is not expected to have a material effect on net periodic benefit costs for 2016.

The Company considers several factors in determining the long-term rate of return for plan assets. Asset-class return expectations are set using a combination of empirical and forward-looking analyses. Capital market assumptions for the composition of the Company's asset portfolio are intended to capture the behavior of asset classes observed over several market cycles. The Company also looks to historical returns for reasonability and appropriateness.

The following is a summary of estimated future benefits to be paid for the Company's defined benefit pension plans at December 31, 2015. Benefit payments are estimated based on the same assumptions used in the valuation of the projected benefit obligation.

(in millions)	Estimated Benefit Payments
Year
2016	$	14.9
2017		15.5
2018		15.1
2019		14.6
2020		14.4
2021 - 2025		64.3

Defined Contribution Plan

Additionally, the Company maintains defined contribution plans covering a significant portion of its employees. Expenses for the plans were approximately $12.2 million in 2015, $11.1 million in 2014, and $10.0 million in 2013.

Employee Stock Ownership Plan

The Company also sponsors an employee stock ownership plan ("ESOP") as part of one of its existing savings plans. Costs for the ESOP are included in the defined contribution plan noted above. The ESOP is available to eligible domestic employees and includes a match of contributions made by plan participants to the savings plan up to a maximum of 4.00% of a participant's eligible compensation, divided between cash and an employee-directed election of the Company's common stock, not to exceed 50% of the total match. Participants are not allowed to direct their contributions to the savings plan to an investment in the Company's common stock. A breakdown of shares held by the ESOP at December 31 is as follows:

(in millions)	2015		2014		2013
Shares held by the ESOP		1.3		1.4		1.7